Market friendly land reform in South Africa: does it work for the poor?

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Market friendly land reform in South Africa: does it work for the poor?

The first post-apartheid South African government aimed to establish democratic institutions and prosperity in a non-racial society. Pensions, housing subsidies, and land reform were to kick-start the process of equitable and sustainable development given their potential direct impact on poor people. But the sheer scale of poverty, the legacy of apartheid, and the competitive global economy meant that progress was slow. Five years on however, collaborative research by the Universities of Natal and Pretoria and the World Bank, that for the first time surveys beneficiaries of land reform, is optimistic: the poor are being targeted and land reform may well prove economically viable for South Africa.

The need for land reform was plain. White South African government policies had resulted in a dualistic and unequal system. On one hand you had heavily subsidised, highly mechanised white farms on the most fertile land available, whilst the black population eked out a living in overcrowded infertile homelandson the other. Black people owned an average 1.3 hectares whilst white people owned 1,570. Crucially, 72 percent of the poor lived in rural areas. South Africa may have been self-sufficient in food but this came with an extremely high economic and social price tag.

How effective has land reform been five years on? Specific questions include:

To what extent have land reforms reached the rural poor?

Have the reforms been appropriated by a small minority of influential people?

Does reaching out the poor preclude sustainable productivity?

The programme that emerged evolved gradually out of a process of learning, public consultation and discussion on what works and what doesn't. Key design issues included decisions that land reform should:

be demand-driven rather than supply-driven. Land markets, it was realised however, will not automatically work effectively for the poor and eligible families (with a monthly income below R1,500) have been provided with a land purchase grant.

be poverty- rather than productivity-oriented: co-participation by beneficiaries was not permitted to facilitate access to the grant and risk pooling, and help create economies of scale households had to form a group to access the land purchase grant.

have a centralised approval and implementation structure

focus on planning rather than accountability - beneficiaries had to produce proposals before taking over land but mechanisms for accountability after the event do not yet exist

Key findings include:

Beneficiaries making a regular cash or labour contribution have significantly higher profits than those who do not.

Awareness of a project's governance structure - of the rules and trust is an important determinant of project success.

Large projects are significantly less likely to be economically successful.

The survey of land reform beneficiaries suggested that even though it has been far harder than anticipated to implement land reform the way it was originally envisaged, it nevertheless has considerable potential to improve the productive capacity and welfare of South Africa’s rural poor.

Key policy lessons include:

Reform is not only about economic viability, however: poorer people who rely on land reform for subsistence could be better assisted if some of the requirements to qualify were dropped.

Implementation and evaluation could benefit from linking land reform more explicitly to and learning from other parts of the government's Reconstruction and Development Program.

To enhance beneficiaries’ feeling of ownership and chanced of economic success, beneficiaries should be required to make some contribution of their own.

Improving awareness through dissemination campaigns: increasing popular participation would reduce the costs of both beneficiary training and the provision of complementary infrastructure.

Decentralising project approval to local government where information is more readily available would improve the monitoring and surveillance of performance, and speed up implementation and thus assessment of the productive potential.

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